Oh, the UK housing market! It just loves to be the centre of attention, doesn't it? And this time, it's not just hogging the limelight, but smashing records left, right, and centre.
Brace yourselves, folks, because UK house prices have just leaped to a record high of £372,894 for the first time. Let's take a deep dive into this rollercoaster ride of a market and figure out what on Earth is going on and why I feel this is not a permanent feature, or at least for the next couple of years.
The High Jump: A 1.8% Increase in May
The average price of houses rocketed by 1.8% in May, according to Rightmove, reaching an all-time high of £372,894. This marked the fastest growth in asking prices in a year, with Rightmove director of property science Tim Bannister noting it as a "sign of increasing confidence from sellers". But wait, there's more...
London: Because Why Should the Capital Be Left Behind?
London's property market saw values rise by a whopping 2.8% month-on-month, following a 0.5% fall in April. Demand outside the capital is up by 3% on levels seen before the pandemic. The UK housing market seems to be on a confidence high, but first-time buyers are still grappling with affordability amidst the cost-of-living crisis and increasing interest rates. This simply means that there is no relief for first time buyers and those who wish to avoid any recession that may(or may not) be coming have one final chance to move their property.
The Reasons Behind This Price Surge: Take Your Pick
Asking prices for British homes rose in May, thanks to a better economic outlook and steadier mortgage rates, which offset the impact of the Bank of England's interest rate hikes. "One reason for this increased confidence may be that the gloomy start-of-the-year predictions for the market are looking increasingly unlikely," said Tim Bannister, director of property science at Rightmove.
Moreover, the UK economy has been more resilient than expected, avoiding predictions of a recession. Borrowing costs have eased from their peak, and mortgage rates have stabilised on a week-to-week basis. So, it's a combination of factors that's fueling this price surge, making it a perfect storm of record-breaking UK house prices.
The Surprising Resilience of the UK Economy
At the start of the year, British house prices were forecast to plummet by as much as 15% by mid-2024. But guess what? The UK economy has proved to be more resilient than anticipated. It has managed to dodge recession predictions and remained steady, despite the turmoil in financial markets in the fall. So, UK house prices have defied the odds and are now basking in the glory of record highs.
Buyer Demand: Higher Than Pre-Pandemic Levels
Buyer demand in May was 3% higher than the same month in 2019, before the coronavirus pandemic threw the market into chaos. Other indicators have painted a more mixed picture, however. Mortgage lender Halifax said that property prices grew at the slowest annual pace in over 10 years in April. Meanwhile, rival Nationwide said prices rose by a monthly 0.5% in April after falling for seven consecutive months.
The Average Home Price: Climbing the Ladder
In the last year, asking prices have jumped 1.5%. Tim Bannister, director of property science at Rightmove, said the "gloomy" predictions for the market at the start of the year are now "looking increasingly unlikely". Steadying mortgage rates and a generally more positive outlook for the economy are also contributing to more seller confidence, although, as Bannister points out, there are likely to be more twists and turns to come.
London House Prices: A Race to the Top
London house prices climbed faster than the national average on an annual basis, up 2.8% to nearly £700,000. Hackney house prices in east London saw the fastest growth in the capital, rising by 5.3% over the last year to a staggering £724,000. So, it's no surprise that London continues to be a frontrunner in the UK house prices race.
The Market's Future: A Transition to Normalcy?
The property market is continuing its transitioning to a more normal activity level this year after the exceptional activity of the pandemic years. Steadying mortgage rates and a generally more positive outlook for the economy are contributing to more seller confidence, though there are likely more twists and turns to come, just look at the basket case economy that is the US right now, and you know that they say, "When the US coughs the world catches a cold"
Gladfish: Your Trusty Sidekick in This Wild Ride of a Market
With UK house prices apparently skyrocketing (they're not) and breaking records, it's essential to have a reliable partner by your side to help you navigate this unpredictable market. That's where Gladfish comes in. We can help investors buy and sell properties, so chat with their team about what's right for your portfolio given the current market trends.
So, there you have it. The UK housing market has once again managed to defy expectations and break records. But one thing's for sure: in this ever-changing landscape, it's crucial to stay informed and make well-informed decisions. And who knows? Maybe the next record-breaking headline will be about your property investment success.
Live with passion,